Britons are set to lose out on nearly £1.3bn this year as a result of poor inheritance tax (IHT) planning, according to new research.
Unbiased.co.uk, the professional advice website, said its latest annual Tax Action Report found that UK taxpayers are set to waste £13.5bn in unnecessary tax payments in 2011, with IHT representing 10 per cent of the overall figure.
More in the Financial Times
When an obvious error is made, the courts will sometimes be willing to correct the mistake – but not always.
In a recent case, the court was asked to consider wills executed by an elderly couple. Each will was a simple ‘mirror will’, in which each bequeathed their entire estate to the other and then, on the second death, the whole went to a man they had cared for since he was 15 years old and whom they regarded as their son.
Regrettably, despite witnesses being present, each signed the other’s will and the error went unnoticed until they had both died.
The court ruled that despite the fact that this was obviously a mistake, the wills could not be rectified as they had not been executed validly in the first place.
The unfortunate effect of the ruling is that the estate will now be distributed under the intestacy laws, which in this case means that it will pass to the couple’s natural children, who had been excluded under the wills, and the couple’s intended beneficiary will inherit nothing.
So the message of this as that if you are not sure what you are doing when you buy a will, pick up the phone and ask an adviser to go through the mechanics of executing the will before you proceed.